Management, People and Strategic Marketing - Assignment Example

Assignment questions Critically examine the new product process and market launch strategy presented in the case study. What advice would you offer the sales manager to enhance the effectiveness and efficiency of the new product development process? Product development process is defined as the complete process of conceptualization, design, planning and developing engineering design and execution through to the final stage of marketing or launching the product. Some text books define it as two parallel processes – one for the effective product development and the other for the marketing process. Zinn Company has been affected by the lack of a well defined product development strategy including a well planned marketing campaign. Zinn Co. has been involved in manufacturing high precision agricultural tools and machinery and therefore its production process needs to be focused on quality improvement as a priority area requiring urgent attention (McGrath, 2000). New product development (NPD) process at the Zinn Co. is highly characterized by both a resource constraint and strategic shortcomings. Most of the case study goes into an anecdotal rigmarole except to highlight occasionally the humorous side of the production process. The frequent hiring and firing policy of the owner of the Company has left behind a very bad impression of the production process. The production manager is the most important person in the whole company because it’s a manufacturing firm. Zinn Co. has failed to understand the importance of the operations function and thus the Company has suffered every way from the design to marketing of a new product ( Viardot,2004) . Its marketing strategy from new product launch to final placement of the product in the market has failed again due to years of negligence. Product quality has suffered so much with the rising frequency of warranty based repairs and the lack of experience on the part of the site installation staff. While the lack of or rather the total absence of any coordination between the sales force and the Research & Development (R&D) Department and the single product focus of the Company are acting as hindrances to the development of a customer oriented marketing strategy, there is also an opportunity in the relatively fast developing market for diversified and reliable products. The company ought to focus attention on the following strategically important areas of operations and marketing in the long run. In the absence of a well defined NPD process there must be an alternative parallel development process to complement the existing process of shaky development. For instance when production strategy lacks design and hard engineering planning, alternative product design and engineering processes can be implemented through temporarily hired staff (Stark, 2007). The engineering staff and the R&D staff ought to coordinate on matters of design and technology development. There must be quality standards and a regulatory framework of standardization on quality improvement at the engineering design and manufacturing process level. NPD process ought to be brought under a specialist departmental head who would act independently with regard to final decisions and in coordination with the heads of the R&D Department and the Production Department. The parallel process of marketing and product launching ought to be set through a series of proper marketing phases such as the design and development of a proactive marketing campaign and a new product launching strategy. The latter could be based on a new product design and planning policy that essentially hinges on marketing inputs to a greater extent, e.g. Ansoff’s product/market development/growth matrix can be utilized to place products in niche market segments. Finally a product diversification strategy as per Ansoff’s Growth Matrix can be developed to outdo rivals through proper product life cycle management. 2. The staff of Zinn Co. is described as having low morale. Discuss how the characteristics of the company’s culture, systems and structures have contributed to this situation. In the first place the Company has a vertical organizational structure with a chain of command distributed from top to the bottom layers. The organizational structure essentially precludes a good communication feedback from the lower layers of employees to the top management. Secondly its organizational leadership is highly characterized by an autocratic style of control and management. In the absence of delegation of power, authority and responsibility, performance-related pay would have little relevance. Next its organizational culture is marked by an obvious absence of positive values. In fact Edgar Schein defines organizational culture as, “ A pattern of shared basic assumptions that the group learned as it solved its problems of external adaptation and internal integration, that has worked well enough to be considered valid and therefore, to be taught to new members as the correct way to perceive, think, and feel in relation to those problems”(Schein, 2004). In fact Schein regards those assumptions to be some very important values central to the survival and performance of the organization. The absence of such a value system at Zinn Co. has been one of the main reasons for the low morale of the employees. These three structure related problems along with the organizational systems failure have led to the current decline of the Company. For instance systems include labor/employee relations and Human Resource Management (HRM) function among a host of other things. A vertical organizational structure as that of Zinn Co.’s would not allow the management to communicate with the subordinate employees, especially those in the lower layers, so effectively (Steers et al,1996). The current impasse at the Company can be partially attributed to this communication failure. Senior managers are living in a world of their own while many don’t have any knowledge about their own jobs. Management requires to be carried out with all four functions – planning, organizing, leading and controlling – well executed. As the case study on Zinn Co. shows there is very little or no proper planning, organizing, leading and controlling by the senior management. The employee relations function has completely failed with very little example being set by the senior managers to subordinates. For an efficient management structure some of the middle layers must be removed (delayering). For example to many senior managers with little functional level activity to perform would clutter the communication function. Similarly motivation of employees at the Company has been hindered by the managers’ unwillingness to share to delegate powers and authority to lower level employees. This might be due to the fact that many senior managers are the wrong people in the wrong place in the first instance. They don’t trust their junior employees. As the case study further points out such unqualified and inexperienced personnel managers cannot be justifiably expected to lay down sound principles of management and/or set up structures that would address the organization’s pressing requirements. For instance its inability to meet customers’ requirements can be traced to the very clumsy systems management. The HRM function requires a lot of expertise in recruitment and training of skills. When senior managers don’t coordinate their own functions at the management level the HRM function suffers. Simialry employee relations and public relations suffer due to a lack of coordination. Management and organizational structure related systems need to be clearly defined with each departmental head being appraised of the organizational outcomes and goals. Though there is a clumsy system of achieving targets, the Company lacks proper mechanisms to constantly monitor real progress made in productivity. Organizational culture contributes much to its success or failure. In the case of Zinn Co. its culture is determined by the autocratic leadership style of the founder. The latter’s negative attitude towards the staff has been responsible for the current failures. In the first place organizational culture as defined by Schein above ought to be correlated with the organizational outcomes, e.g. profits, sales volumes, net gains, market share and the brand loyalty. None of these outcomes has been identified in the corporate goals and neither do they occupy any place of importance in the Company’s overall planning process. All the more Zinn Co. has lost its control over the market due to its internal structure related deficiencies. For example its marketing has not been independent enough to deal with customers on their own. When there is little or no coordination between the sales team and the rest of the organization due to overlapping organizational structures there is very little efficiency in meeting the customer’s demand for follow up services and still worse there is very little or no room for product diversification because market research or feedback from the sales team is not forthcoming. 2. (a). Discuss how the company can improve the working capital and liquidity situation. In the absence of proper strategic planning which involves four steps in identifying the organization’s long term capabilities and targeting objectives there is very little hope for Zinn Co.’s current level of underperformance to be reversed unless some rapid result oriented strategy is put in place. In the first place its persistent cash flow problems must be resolved. In the absence of sufficient liquidity the Company can expect no adequate cash flow to carry on with its current operations. Positive working capital requires its current assets to exceed its current liabilities. Already the Company is moving into red because of its inability to pay for supplies and meet salary demands. “Strategic planning refers to the process of determining a companys long-term goals and then identifying the best approach for achieving those goals”(www.invesotrwords.com). The four strategic planning steps are - Where is the company at present? What does it have to work with, like resources? What does the company want to aim at? and How does it reach those goals? The owner’s habit of withdrawing one million US $ annually is more or less a veritable depletion of the Company resources and therefore the compulsion to run the business for day-to-day survival is the bane of the organization. For example the existing capital stock of the Company needs immediate replacement. While the Company doesn’t have adequate finances to rely on in order to undertake a restructuring program with immediate effect, leasing can the only alternative. Leasing capital equipment and machinery is a good idea given the Company’s reliance on daily returns (Schein, 2006). The Company can for the best leasing terms though this could be difficult due to its poor financial record and the dilapidated state of assets. However that’s the only alternative the Company has right now. When the Company’s accounts receivables are getting smaller day by day the only alternative would be to borrow but such borrowing costs would rise with the Company moving into red. Creditors like banks would question the Company’s ability to repay loans (Weide and Maier, 1985). Leasing much wanted equipment and machinery would help the Company to overcome some of its more pressing capital needs now. Capital has a life time and their net rate of return at the beginning would be much higher. Depending on the rate of interest and the Net Present Value (NPV) of the assets the Company would be able to breakeven before long. Here another alternative is the utilization of a factoring facility. Instead of going for overdrafts the Company can make use of a factoring company to collect its debt in time. Even if the factoring service provider fails to collect bills in time still the cash flow and liquidity can be maintained. Diminishing cash flow can be reversed with increasing sales. The cumulative impact of cancelled orders and rising stock can be overcome with proper stock control measures. For example Just-in-Time (JIT) is an appropriate stock control technique for the Zinn CO. right now because it enables the Company to order materials only depending on the more pressing needs. As and when materials are needed they can be ordered depending on the suppliers’ efficiency. The Company can avoid not only the negative impact of cumulative stocks but also the cost associated with obsolete stock. Most of the orders that were cancelled in the last moment due to customers’ failure to meet their obligations could have been avoided if JIT had been utilized. The Company also needs to identify the profit centers and cost centers separately in order to increase relative profitability or positive contribution of each profit center and reduce relative cost of each cost center respectively. b). Discuss the impact of the accounting concepts of Historic cost and Prudence on the company’s ability to borrow more cash from banks. As already pointed out above, creditors like banks, look at the Company’s repayment capacity before approving a loan or an overdraft. The accounting concept of historic/historical cost is defined as the original money value of an asset and is based on the fact that the asset concerned is stable in value over the time period under consideration. Though it’s not true because the assets might depreciate in value over time, it’s a very convenient practice to assess the asset’s value irrespective of its change in value over the years (Atrill and McLaney , 2007). On the other hand the accounting concept of prudence refers to the company’s ready acknowledgement of liabilities or debt as soon as they take place or transactions are carried out while credit or money due to the company would be assessed or acknowledged only when it’s realized. In other words by implication it means that only the lesser value of the asset or the item could be taken in while the higher value would be ignored. This concept has received much attention due to its practical nature though what’s realized through payment to the company can be more valuable than what’s entered in the books. Despite these shortcomings these two concepts have been recognized as very significant in the assessment of a firm’s assets and liabilities in its balance sheet. Zinn Co. hasn’t been able to replace its capital stock or increase the value of its buildings through any renovation over the years. Thus by taking the accounting concept of historic value one is tempted to believe that the Company has considerable assets in value terms. In fact no bank manager would look at a company’s assets in this way. In the first instance the bank looks at the company’s ability to repay a loan only after the assets have been valued. It’s the current market value of the assets that matters to the lending bank and the accounting concept of historic cost. Thus the bank is less likely to grant or approve a loan to the Zinn Co. Next going by the accounting concept of prudence the Zinn Co. has very little by way of assets in its balance sheet to show because very few payments due to it have been collected and are collectable. In other words bad debt is rising fast against realizable debt. Customers have often failed to meet their payment obligations to the Company. This outcome is less likely to recommend the Company to the lending bank for a loan. In other words the bank would hesitate to grant or approve a loan to the Company. Overall these two concepts show that banks would less favorably consider Zinn Co. for a bank loan because the Company has been acting irresponsibly in balancing its assets against liabilities. The Company hasn’t been able to give true meaning to the historical cost concept because its valuation of non-realizable debt is meaningless except to put it all under bad debt. On the other hand the prudence concept is equally useless because there is very little by way of assets to give any value to. If the Company expects to raise a loan through these assets the bank would look at their market value in determining the ability to repay. Thus there would be much less of a value for some depleted assets that the Zinn Co. possesses now. REFERENCES 1. Atrill, P, and McLaney, E . (2007) Financial Accounting for Decision Makers, London: Financial Times Management 2. McGrath, M. (2000) Product Strategy for High Technology Companies , New York: McGraw-Hill; 2nd edition 3. Schein, E. H. (2004) Organizational Culture and Leadership (The JosseyBass Business & Management Series) ,New Jersey: Jossey Bass 4. Schein, E. H. (2006) Organization Development: A Jossey-Bass Reader (The JosseyBass Business and Management Reader Series) New Jersey: Jossey Bass 5. Stark, J. (2007) Global Product: Strategy, Product Lifecycle Management and the Billion Customer Question (Decision Engineering), London: Springer 6. Steers, R. M., Porter, L. , Bigley, G., Porter, L. W and Bigley, G. A. (1996) Motivation and Leadership at Work (The McGraw-Hill Series in Management,) Ohio: McGraw-Hill Education (ISE Editions); International Ed edition 7. Viardot, E. (2004) Successful Marketing Strategy for High-Tech Firms (Artech House Technology Management and Professional Developm) Massachusetts : Artech House Publishers; 3 edition 8. Weide, J.H.V. and Maier, S. F. (1985) Managing corporate liquidity : an introduction to working capital management, New york: John Wiley & Sons, Inc. 9. Definition of strategic planning, retrieved from www.invesotrwords.com on July 24, 2009. Read More